St. Nicholas Insurance v. Merchants' Mutual Fire & Marine Insurance

This action was brought, and the recovery in it was had, upon a policy of reinsurance executed and delivered by the defendant to the plaintiff. The plaintiff in the first instance issued a policy of insurance upon the barge Berkshire, her tackle, etc., while used as a freight-boat on the Hudson river, bay and harbor of New York, or while lying up or stopping at any of the ports or places in such waters.

This policy was in the sum of $4,000, extending from the 16th of March, 1864, until the 16th of March, 1865. And on the 1st of March, 1865, the defendant issued its policy of reinsurance by which it insured the plaintiff, in the sum of $2,000, against loss by fire on the barge .Berkshire, running on the Hudson and East rivers, from the 28th day of February, 1865, until the first day of the next September; and the loss, if any, was declared to be payable pro rata with the reinsured. This policy was afterwards extended until the 16th day of March, 1866, and on the 27th day of November,'1865, the barge was destroyed by fire while laden with a cargo, and lying at Yan 'Wie’s dock, a few miles below Albany, on the Hudson river. The defendant resisted its liability under its *111policy for several reasons. One of these was, that the plaintiff, on the Yth of March, 1865, issued a new policy on the barge, by which it was, in the same terms as were used in the original policy, insured against loss by fire from the 16th day of March, 1865, until the 16th day of March, 1866, in the amount of $5,000, and as notice of that was not given to the defendant, and it was not indorsed upon its policy, it was claimed that it had ceased to be liable when the barge was destroyed.

The clause contained in the defendant’s policy upon this subject was the usual one by which it was declared that if the assured or its assigns should thereafter “ make any other insurance on the same property, and shall not, with all reasonable diligence, give notice thereof to this corporation, and have the same indorsed on this instrument, or otherwise acknowledged by them in writing, this policy shall cease and be of no further effect.” It is not necessary to determine whether this clause would be violated by a further insurance made upon the same property by the party reinsured, for the reason that the defendant’s policy, by its own terms, expired before the loss was caused by the destruction of the property, and before the happening of that event, and after the increase was made in the insurance issued by the plaintiff, from $4,000 to $5,000, the defendant extended its insurance until the time designated for the expiration of the last policy issued to insure the property by the plaintiff.

That was done by a receipt, acknowledging the payment of a further premium for that purpose, and containing an agreement that its preceding policy was thereby continued in force from the 1 st of September, 1865, until the 16th of March, 1866, and that had the effect of reviving the insurance from the time it was given, even though it had previously become inoperative by reason of the plaintiff’s failure to give notice of the increase in the amount of its own insurance, and its omission to have it indorsed upon the defendant’s policy, or to be otherwise acknowledged by it in writing; for the agreement contained in the receipt created a new contract between the parties by which the plaintiff was reinsured, according to the terms of the policy nominally as well as actually expiring at that time, for the further period mentioned in the receipt.

It took effect at the time when the latter instrument was made

*112and delivered, and from that time applied tbe preceding policy to tbe additional insurance made by tbe plaintiff. It was a new contract of reinsurance, creating a liability on tbe facts tben existing; and it revived tbe defendant’s policy, even if, before that, it bad become invalid for want of conformity to tbe clause already mentioned ; tbat was tbe natural result of what tben transpired, and it lias the sanction of several authorities existing upon this subject, in which it has been held tbat tbe renewal of tbe preceding policy creates a new contract of insurance. (Noyes v. Hartford Fire Ins. Co., 54 N. Y., 668; Peoria Marine avid Fire Ins. Co. v. Hervey, 31 Ill., 46, 64; Hartford Fire Ins. Co. v. Walsh, 54 id., 164, 167; Brady v. Wortlvwestern Ins. Co., 11 Mich., 425-444; Luciani v. Am. Ins. Co., 2 Walton, 167; Driggs v. Albany Ins. Co., 10 Barb., 440; Carroll v. Charter Oak Ins. Co., 38 id., 402.) And as tbe risk newly taken by tbe defendant was in no respects changed, tbe policy contained nothing rendering tbe receipt inoperative or ineffectual as an extension of tbe insurance. Neither was tbe defendant’s policy avoided by any omission to comply with tbe clause requiring tbat notice of previous insurance should be given to it, and such insurance indorsed upon the policy issued by it, for tbe clause inserted in tbe defendant’s policy declaring tbat any loss incurred should be borne by it pro rata with tbe plaintiff, was apparently designed to dispense with any further notice of tbe insurance previously made by tbe plaintiff upon the property mentioned. It imported tbe existence of an understanding tbat tbe plaintiff bad already insured the property, and tbat tbe defendant’s insurance was designed as an indemnity, to tbe extent of tbe sum mentioned in it, against tbe loss which tbe plaintiff might be required to bear by means of its own insurance. Tbat was a sufficient indorsement of tbe insurance made by tbe plaintiff when tbe defendant’s policy was issued, and it was renewed when tbe receipt continuing tbe insurance was given on tbe first day of tbe • following September. This clause, as a portion of tbe said agreement, was rendered applicable to tbe insurance then created, as well as tbe others contained in tbe same policy. Altogether, they effected a new insurance to tbe plaintiff in this action, as it bad then itself become bound by its second policy.

Tbe plaintiff’s policies were both much more explicit in their *113description of the business of the barge than the one issued by the defendant. They insured her while used as a freight-boat, and while lying up or stopping at any of the- ports or places on the waters of the Hudson river, bay and harbor of New York; but while they were more minute, they were really no more extensive in their signification than the terms made use of by the defendant. By its policy, it insured the barge while “ running on the Hudson and East rivers.” The term “running” was evidently here employed in the sense ordinarily given to it, as it is applied to the business of navigation, and for that reason it could not have been intended that it should be restricted to risks encountered only when the barge was in motion, but it was equally within the protection intended to be afforded by the policy while it was lying at the wharves it was obliged to resort to for the purpose of receiving and discharging its cargo. The term “ running,” as it was used by the defendant, must have been designed to include all that ordinarily would be comprehended by the business of a vessel in active employment. It described the condition of a vessel commercially engaged; and it was used by way of contrasting the difference between vessels laid up and out of use and those making trips upon-the water. It must have been so understood by the parties in this instance, for nothing less than that could have been consistent with the indemnity designed to be secured by the defendant’s policy. It was known by the defendant that the plaintiff had insured this barge in the use which would be expected to be made of it upon the waters of the river, and of the harbor of New York. And to share its liability,,the policy was made by and taken from the defendant. Both parties understood that to be the design entertained, and the language selected was assumed to be adequate for that purpose. That was its popular meaning, and the fair intention of the parties cannot be maintained by placing any other construction upon it. By “ running ” upon the waters of the Hudson and East rivers the business of the barge employed upon those waters must have been intended to be described; and that included the time required for lading and unlading, as well as that when the barge was actually in motion. She was all the while employed upon these waters, and that was running upon them within the meaning of that term in its application to commercial pursuits.

*114i Wien the barge was burnt sbe was laden witb a cargo, wbicb in part consisted of baled bay and straw, wbicb were mentioned by tbe pobcy of tbe defendant as extra-hazardous articles. And it was in substance provided that tbe defendant should not be liable, under its pobcy, for any loss occurring while tbe barge was used for tbe purpose of carrying on or exercising therein any trade, business or vocation, or storing therein any of tbe articles, goods or merchandise denominated extra hazardous, unless otherwise specificaby provided for or agreed to in writing added to or indorsed upon tbe pobcy. But by insuring her as a barge running on tbe waters of tbe Hudson and East rivers, it was contended by tbe plaintiff, that this clause bad been so far compbed witb as to render tbe defendant bable. It was maintained that it was part of the ordinary business of barges employed upon those waters, to carry baled bay and straw ; and if that were true, then tbe insurance made abowed tbe barge to carry those articles. It included all that such barges were usually employed to do. And if carrying baled bay and straw was part of that employment, then it was in writing added to and indorsed upon tbe pobcy, and tbe defendant was bable for a loss arising from it.

Tbe plaintiff’s pobcy, in express terms and for an additional premium, abowed tbe barge to carry baled bay and straw. But if it was really a portion of tbe business, in tbe transaction of wbicb it was insured, this was simply a needless precaution, making no change in tbe obbgations of tbe insurer. It did not preclude tbe plaintiff from stib claiming that tbe defendant bad become bable to tbe same extent, by means of tbe general terms used in its pobcy to describe tbe business of tbe barge. In that respect tbe case resembled.very nearly that of Steinbach v. Lafayette Fire Insurance Company (54 N. Y., 90), where tbe special enumeration of one extra-hazardous article did not preclude tbe plaintiff from bis right to insist upon tbe benefit of tbe general terms, otherwise used for tbe purpose of including different articles deemed to be equaby hazardous. It was simply a circumstance opposed to tbe position taken concerning tbe ordinary business of a barge, and in that respect it would not fail to be attended witb its appropriate effect. But tbe plaintiff bad tbe right, if it could succeed in doing so, stib to show that tbe common business of barges upon these rivers included tbe carriage of baled bay and straw as portions of their cargoes; and if that could be estabbsbed, then tbe *115insured would seem to be entitled to maintain tbe action brought by it upon tbe policy. For tbe underwriter is presumed to understand tbe business which may be made tbe subject of tbe insurance, and for that reason, to intend to protect what may properly appear to constitute a portion of it, as it is usually carried on. [Harper v. Albany Ins. Co., 17 N. Y., 197; Bryant v. Poughkeepsie Ins. Co., id., 200; Pindar v. Kings Co. Ins. Co., 36 N. Y., 648; Hall v. Ins. Co. of North Am., 85 id., 292.)

For tbe purpose of showing that tbe present case was within tbe principle sustained by these authorities, several witnesses were examined who testified that barges on tbe Hudson river commonly carried baled hay and straw, and as the case was ultimately made to depend upon the proof of that fact, it must have been found to' have been established, for the jury could in no other way have rendered the verdict which they did for tbe plaintiff. Tbe fact itself was controverted by tbe defendant, where no additional premium was paid for tbe privilege of carrying articles of this description. And it accordingly offered to show that the custom, as it was called upon the trial, was invariably subjected to tbe payment of an extra-hazardous premium. This was rejected on the objection of tbe plaintiff, and tbe defendant excepted to its exclusion. Tbe contract existing in this case was made between tbe insurance companies, each of which must have understood tbe business to which it appertained. And if tbe privilege of carrying baled bay and straw upon barges was subject to this restriction, tbe evidence offered to prove it ought to have been received. Tbe substance of tbe offer was that no such privilege existed unless a special premium were paid for its enjoyment; and that bad some tendency to estabbsb tbe fact that these articles were not understood to be ordinary portions of tbe cargo of a barge. If that were tbe fact, then insurance, made upon such a vessel running upon these rivers, would only include baled bay and straw, when specially provided for as extra-hazardous commodities. The evidence given on tbe plaintiff’s behalf directly tended to establish tbe fact that they were included in the terms used as descriptive of tbe business itself; while that offered by tbe other party, if it bad been received, would have indicated that they were entitled to no such comprehensive signification. It would have added a material cpialifi*116cation and restraint to that given on the part of the plaintiff, and might possibly have led to a different result in the action.

It was also objected that the privilege given to burn kerosene for lights avoided the insurance made- by the defendant. But as that article was not used oh the barge, the simple liberty to use it could not be attended with the effect of annulling the policy in controversy.

It was error to reject the evidence which was excluded, relating to the business of barges on the rivers, and for that reason the judgment and order should be reversed, and a new trial ordered, with costs to abide the event.

Judgment and order reversed, new trial ordered, costs to abide event.